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Author:Hu, Jie 

Journal Article
Mergers and acquisitions in China
Mergers and acquisitions are an integral part of any market economy, enhancing an economy's efficiency by reallocating and recombining production resources for better use. In China, the development of mergers and acquisitions activity has played a positive role in privatizing and revitalizing the country's inefficient state enterprises, attracting foreign investment, and rationalizing the industrial structure. The authors of this article discuss this development in the context of China's market-oriented economic reform and provide an outline of the advantages and disadvantages of the country's approach to mergers and acquisitions. ; Three reasons emerge as forces driving mergers and acquisitions activity in China, reasons that are likely to continue fueling its growth: the government's need to restructure and revitalize the state-owned enterprises; the growing needs of enterprises; and the market's potential for attracting more international capital. Because of the importance of the mergers and acquisitions market in restructuring and modernizing the industry of China, the authors expect its development to continue, but they observe that careful handling of many institutional deficiencies and social problems as well as political obstacles will be required to avoid major setbacks.
AUTHORS: Hu, Jie; Dong, Jie Lin
DATE: 1995

Journal Article
Information ambiguity: recognizing its role in financial markets
AUTHORS: Hu, Jie
DATE: 1994

Journal Article
The insider trading debate
Securities trading has generated some of the most sensational scandals in the popular business press. In one of the most publicized cases of insider trading, in the late 1980s Michael R. Milken and Ivan F. Boesky were sentenced to stiff prison terms and payment of enormous damage assessments and punitive penalties. However, at least among economists and legal scholars, insider trading remains a controversial economic transaction. A substantial body of academic and legal scholarship questions whether insider trading is even harmful, much less worthy of legal actions. ; The authors of this article explore the sources of the insider trading controversy and suggest a road map for blending the divergent scholarly opinions into a policy framework for regulating insider trading. They conclude that the divergence of opinion can be attributed primarily to disagreement over which effects of insider trading will have the most significant impacts on economic well-being. The voluminous literature suggests that designing effective policy on insider trading requires a detailed assessment of the structure of the economy, some sensitivity to cultural attitudes toward the appropriateness of such trading activity, and careful consideration of the enforcement costs associated with regulating trade.
AUTHORS: Noe, Thomas H.; Hu, Jie
DATE: 1997

Working Paper
Financial market breakdown due to strategy constraints and information asymmetry
This paper demonstrates the relevance of strategy constraints on market makers to the possibility of financial market breakdown when there is information asymmetry between market makers and investors; both the case of competitive market makers and the case of a monopolistic market marker are included. Specifically, the paper discusses three types of strategy constraints on the market makers and their implications for the equilibria. The results call attention to the need for more precise specifications of institutional environments (beyond information asymmetry and the mode of competition/monopoly) when considering the possibility of financial market breakdown.
AUTHORS: Hu, Jie
DATE: 1995

Working Paper
Insider trading, costly monitoring, and managerial incentives
In this paper we show, in an incomplete contracts framework that combines asymmetric information and moral hazard, that by permitting insiders to trade on personal account the equilibrium level of output can be increased and shareholder welfare can be improved. There are two reasons for this. First, insider trading impounds information regarding the costs and benefits of effort and perk consumption into asset prices, which allows shareholders to choose more efficient portfolio allocations. Second, allowing insider trading can induce managers to increase their stake in the firm beyond that obtained through bargaining with shareholders. This effect leads to a reduction in managerial perk consumption and/or increased managerial effort. Insider trading can also be costly for shareholders' intermediate range of monitoring costs and project difficulty because, in such cases, the efforts of managers are quite sensitive to the exact level of fractional shareownership, which managers can endogenously change if they are able to trade on personal account. Interestingly, when monitoring and effort costs are low, managers may prefer restrictions on their ability to trade as such restrictions will force shareholders to offer them a larger fraction of output.
AUTHORS: Hu, Jie; Noe, Thomas H.
DATE: 1997

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